Record-Breaking Lease Deal Rumored on Fifth Avenue in New York City
February 21, 2012
By: Elaine Misonzhnik
Word on the street is that Mac Cosmetics, a division of Estee Lauder, signed a lease at Vornado Realty Trust’s 691 Fifth Avenue building that breaks the record for the highest rent ever paid for a New York retail space at $3,000 per sq. ft. ...
... The question now is whether Mac Cosmetics could sell enough lipstick and eye shadow at its new location to justify maintaining such a pricey store. ...
... “It’s very hard for me as a real estate guy to quote a $3,000-per-sq.-ft. rent number,” says Patrick Breslin, executive vice president with the national retail group at Studley, a tenant representation firm. “Because it’s going to get to a point when, no matter who you are, it’s nearly impossible for retailers to recoup that money. And the people signing these leases absolutely believe they can make money on it.” ...
... The likely wider implication of the deal would be an upward movement in rents in the Fifth Avenue submarket, which might completely price out middle market retailers.
“Rents on decent streets [outside upper Fifth Avenue] are now at $400 and $500 to anywhere up to $1,000 per sq. ft.,” says Breslin. “For a lot of the traditional national retailers, those are big numbers for them.”
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